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FG Close to Appointing Banks For Eurobond Sale

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  • FG Close to Appointing Banks For Eurobond Sale

The Federal Government is close to appointing banks to help underwrite the country’s first international bond since 2013 as the government deals with the worst fiscal crisis in 25 years.

Standard Chartered, Citi and Stanbic IBTC have been in talks with officials to arrange the Eurobond sale, according to sources close to the deal.

Vice-President Yemi Osinbajo has last week said the government hoped to conclude the sale of a $1bn Eurobond by the end of the first quarter of 2017.

The recent rise in global crude oil prices, coupled with expectations that Nigeria was making progress with plans to arrange loans from bilateral and multilateral lenders such as the World Bank, is expected to strengthen the country’s position in global capital markets after years in the cold.

The Financial Times reported that a successful debt sale would mark the end of a year of repeated setbacks for Nigeria, adding that prices for existing debt had fallen sharply as investors had shied away from the country, unsettled by militant attacks in the Niger Delta.

Efforts by the country to tap the bond market earlier this year had been frustrated by volatile oil prices, currency weakness after the peg was abandoned in June and the government’s failure to implement further reforms demanded by the international community.

The Head of Research at Ashmore Investment Management, Jan Dehn, said that even after the government abandoned its currency peg, there was a perception among investors that the naira could weaken further — leaving them reluctant to lend the country “hard” currencies such as dollars.

“People did not trust the currency,” he said. “It’s a difficult process for the country. [President Muhammadu] Buhari inherited a lot of problems including the difficulties with Boko Haram, the economy and the falling oil price.”

In spite of the removal of the currency peg, the official exchange rate remains far higher than the rate at which the currency changes hands in the black market.

Nigerian bankers and economists say the central bank is still managing the currency instead of allowing it to float freely.

But Kevin Daly, portfolio manager on the emerging market fixed-income team at Aberdeen Asset Management, says the rise in oil prices and move towards reform means there was scope for the country to tap debt markets. “Nigeria has very little external debt,” he added.

Nigeria first issued international debt in January 2011, tapping markets once again in mid 2013 to raise $1bn of five- and 10-year debt.

The yield on Nigeria’s bond due in 2023 jumped from 6.6 per cent almost 10 per cent earlier this year. It was said to be trading at 7.8 per cent.

Oil production in the country has fallen sharply as attacks on energy infrastructure curtailed supplies and compounded the effects of the price of its main export falling dramatically early in 2016.

The vandalism and production challenges meant that the country was granted an exception to the recent OPEC agreement to cut output for the first time since the global financial crisis, the report stated.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Finance

Emefiele Pledges Accommodative Monetary Policy to Boost Economic Growth

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Emefiele Pledges Accommodative Monetary Policy to Boost Economic Growth

The Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, has pledged to adopt accommodative monetary policy stance in 2021 in order to support economic growth in the country.

Emefiele, said this on Friday, while speaking at a CBN/Bankers’ Committee’s initiative for economic growth, which is a one-day special summit on the economy by bank chief executive officers.

The theme of the summit is: “How to Overcome the Pitfalls of Recession.”

Nigeria’s economy recently came out of recession, according to the Gross Domestic Product report for fourth quarter 2020 released by the National Bureau of Statistics.

Owing to the slump GDP growth of 0.11 per cent that lifted the economy out of recession, Emefiele said it was imperative that, “we do all we can in 2021 and beyond to ensure that we build on the positive momentum and strengthen our efforts at stimulating growth.”

He expressed optimism that with the discovery and deployment of vaccines worldwide, 2021 would be a year of massive global recovery and Nigeria must not be left out.

“The banks CEOs are here, whether by moral suasion or by force, they will have to participate in this journey. In order to drive and sustain this recovery therefore, we need to sustain the accommodative fiscal and monetary policy measures aimed at improving access to finance for households and businesses.

“Secondly, we must prevent a resurgence in Covid-19 related cases. Thirdly, we must ensure that a significant number of our population is significantly vaccinated and also improve foreign exchange inflows into our country,” he added.

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Banking Sector

CIT Microfinance Bank Disburses Over N16bn Loans

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CIT Microfinance Bank Disburses Over N16bn Loans

CIT Microfinance Bank Limited says it has disbursed about N16bn loans since it commenced operations as part of its contributions to the financial sector and empowerment of businesses.

The Managing Director of the microfinance bank, Mr Kingsley Eremionkhale, disclosed this during the company’s 10th anniversary in Lagos recently.

He reiterated that the bank was committed to supporting the growth of small and medium-scale enterprises in the country.

“Since inception, we have disbursed loans worth about N16bn. Our operation is not just about profit-making, but we have impacted many lives, empowered many businesses, and done a lot in terms of our core mandate as a microfinance bank.”

While appreciating its customers who had been loyal to it for years, he said it was concerned about their business success.

The managing director said, “We are part of our customers’ businesses. We provide services beyond lending and savings products and we also give financial advisory services.”

He appreciated the customers who had stayed with the financial institution for many years.

The managing director noted that the MfB is a state-licensed bank operating in Lagos, and a subsidiary of Capitalfield Investment Group.

He also attributed the success of the MfB to the board of directors which it said had been supportive, the management team and its workforce in the past 10 years.

While saying that the bank could lay claims to exponential growth, he said the public should expect more from it.

He also said that it was driving its operations through its digital offerings and our e-channels, to improve its services to our customers.

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Finance

FMDQ Approves Valency Agro’s N5.12bn Commercial Paper

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FMDQ Approves Valency Agro’s N5.12bn Commercial Paper

FMDQ Securities Exchange Limited has announced the approval of the quotation of the Valency Agro Nigeria Limited N5.12bn Series 1 Commercial Paper under its N20bn CP Programme on its platform.

The Exchange said in fostering the development of the Nigerian debt capital markets, it had continued to avail its credible and efficient platform as well as tailor its listings and quotations services to suit the needs of issuers and registration members through innovative and uninterrupted service delivery.

It said in a statement on Thursday that the Valency Agro Nigeria CP debut issue came at a time when the Nigerian economy was bedeviled with soaring food prices, amidst compounding challenges of insecurity.

It said the agricultural sector and its attendant transformation agenda had never been more important in driving increased and sustainable production of agricultural products as well as the derived foreign earnings through exports.

The Exchange said the proceeds from the issue of the CP would be applied by Valency Agro towards meeting the mid-term working capital requirements of the various agricultural produce under its portfolio such as cashew, sesame, cocoa and in value addition prior to export.

The Executive Director, Valency Agro Nigeria Limited, Mr Sumit Jain, was quoted as saying, “We are thankful to our investors towards showing their faith in our agenda to grow the agriculture-focused business with a clear aim to maximise value addition and create employment opportunities in Nigeria.

“We would also like to commend the efforts made by FBNQuest Merchant Bank Limited’s team to build the reach and FMDQ for their unconditional support for the industry”.

The Head, Capital Markets, FBNQuest Merchant Bank, Mr Oluseun Olatidoye, said, “FBNQuest Merchant Bank Limited is delighted with the successful debut of the N5.12bn Series 1 CP issued by Valency Agro Nigeria Limited. This reiterates our effort to enable underserved sectors access the debt markets, optimise their capital structure and further deepen the domestic capital markets.

“We are proud of the instrumental role FBNQuest Merchant Bank played in this transaction and appreciate the trust the management of Valency Agro placed in us to assist them. Our clients remain our priority, and we strongly believe their success is our success.”

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